How much a stock's price changes over time is a significant driver for most investors. Not only can price performance impact your portfolio, but it can help you compare investment results across sectors and industries as well.
Another factor that can influence investors is FOMO, or the fear of missing out, especially with tech giants and popular consumer-facing stocks.
What if you'd invested in Cadence Design Systems (CDNS) ten years ago? It may not have been easy to hold on to CDNS for all that time, but if you did, how much would your investment be worth today?
Cadence Design Systems' Business In-Depth
With that in mind, let's take a look at Cadence Design Systems' main business drivers.
Based in San Jose, CA, Cadence Design Systems Inc is a leader in electronic system design space. The company’s Intelligent System Design strategy aids users to transform design concepts into reality by offering computational software, hardware and IP.
Cadence’s core electronic design automation (EDA) software and services enable engineers to develop different types of ICs. Its design IP’s are directly integrated into ICs.
Cadence reported revenues of $4.09 billion in 2023.
The major product lines are as follows:
Functional verification products (27% of total 2023 revenues) comprise four primary verification engines – JasperGold formal verification platform, Xcelium parallel simulation platform, Palladium Enterprise Emulation Platform and Protium FPGA-Based Prototyping Platform.
Digital IC Design and Signoff (27%) offerings include Genus Synthesis solution, Joules RTL power and Modus software solution. Innovus implementation system is the company’s physical implementation offering. The company’s signoff offerings include the Tempus Timing Signoff Solution, Voltus Power Integrity Solution, Quantus Extraction Solution and Pegasus Physical Verification System.
Custom IC Design and Simulation (22%) includes the Virtuoso custom design platform, Virtuoso Advanced Node and the Virtuoso RF Solution. The Spectre Simulation Platform offers large-scale verification simulation.
Systems Design & Analysis segment (12%) offers Allegro system interconnect design platform, Fidelity CFD Software and OrCAD solution. The Allegro System Design Platform aids users in carrying out PCB authoring and implementation, PCB library design management and collaboration, signal and power integrity analysis, IC package and system-in-package design.
Under the IP segment (12%), Cadence offers Tensilica digital signal processors (DSPs), vertically targeted subsystems for AI, audio/voice, baseband and vision/imaging applications, controllers and physical interfaces (PHYs) for standard protocols and analog IP.
In 2023, the company derived 41.4% of revenues from the United States, while the balance 58.6% came from its international operations.
Bottom Line
Anyone can invest, but building a successful investment portfolio takes a combination of a few things: research, patience, and a little bit of risk. So, if you had invested in Cadence Design Systems a decade ago, you're probably feeling pretty good about your investment today.
According to our calculations, a $1000 investment made in November 2014 would be worth $15,672.71, or a 1,467.27% gain, as of November 18, 2024. Investors should keep in mind that this return excludes dividends but includes price appreciation.
The S&P 500 rose 187.80% and the price of gold increased 105.64% over the same time frame in comparison.
Going forward, analysts are expecting more upside for CDNS.
Cadence's Q3 performance gained from demand for its solutions particularly IP, SD&A and hardware and strong bookings. The new hardware systems continue to gain traction, particularly by AI, hyperscale and automotive companies. Management noted that revenues from China have started to improve while recurring revenue growth came in the low teens range. Rapid design activity, owing to transformative generational trends (Gen AI, hyperscale computing, 5G and autonomous driving), is likely to propel the top line in the long run. Management tightened its outlook for 2024 with revenues now projected to be $4.61-$4.65 billion versus $4.6-$4.66 billion guided earlier while non-GAAP EPS is expected to be between $5.87 and $5.93 versus the previously expected range of $5.77- $5.97. Stiff competition and increasing operating expense are concerns.
Over the past four weeks, shares have rallied 12.06%, and there have been 5 higher earnings estimate revisions in the past two months for fiscal 2024 compared to none lower. The consensus estimate has moved up as well.Only $1 to See All Zacks' Buys and Sells
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
